Baugur files for bankruptcy

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The troubled UK high street investor Baugur today neared the end of the road as the Icelandic firm announced it would file for bankruptcy.

The firm sought protection from creditors last month after Icelandic bank Landsbanki called in the group's £1 billion debts.

The group's UK arm, BG Holdings - which owns stakes in a raft of UK retailers such as Hamleys, Iceland and House of Fraser - is already in administration.

Baugur applied to enter the "moratorium" process in Reykjavik - which offers protection in a similar fashion to Chapter 11 bankruptcy procedures in the US - after talks with Landsbanki collapsed.

Today Reykjavik's district court threw out its plans to salvage the business and refused to extend the moratorium, giving Baugur no choice but to file for bankruptcy. The move does not affect the UK businesses.

Baugur's chairman Kristin Johannesdottir said: "The court's ruling today is a disappointment to everyone at Baugur.

"We believe that the company fulfils all the conditions for the extension and that the restructuring plan was viable. However, following the ruling, we have no choice but to file for bankruptcy."

The firm was exposed to a weakening UK high street and its problems were compounded by the crisis which saw the nationalisation of Iceland's major banks last October.